4 Currency ETFs for a Falling Dollar

Despite recent strength, the greenback just isn’t what it used to be. Historically, the dollar is still on the weak side, but with exchange traded funds (ETFs), you can counteract some of the weakness.

Pessimism. Investors pile onto the dollar during any perceived threat to foreign currencies.

Interest Rates. Money goes to countries with higher interest rates – investors get more return out of their buck.

Supply. As a country prints out more money into the system, the currency will take a dive.

The Federal Reserve stated that it will print out $600 billion to purchase Treasury debt, which will keep interest rates low. Consequently, investors would look to the stock market, housing or other currencies for better returns. In turn, higher housing and stock prices would lull people into feeling wealthier thus spending more. The depreciated dollar would also make U.S. exports easier to sell abroad. [Your Currency ETF Questions Answered.]

If you believe in the dollar’s continued weakness, consider these three options:

CurrencyShares Swedish Krona ETF (NYSEArca: FXS). Sweden’s debt-to-GDP was around 39% last year, as compared to 83% for the U.S.

CurrencyShares Australian Dollar Trust (NYSEArca: FXA). Australia has boosted its interest rates as its economy strengthens on increased demand for commodities from China. Some believe that the Aussie dollar may be even too expensive now that everyone wants it.

CurrencyShares Canadian Dollar Trust (NYSEArca: FXC). Canada also benefits from high commodity demand and a prudent fiscal policy.

WisdomTree Commodity Currency Fund (NYSEArca: CCX): Own all the currencies of major commodity-producing countries in one ETF.

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